Slide 1: Business Update and Product Strategy
Business Update and Product Strategy September 15, 2005 IAA 2005 Automotive Conference R Exhibit 99.1
Slide 2: Bob Rossiter, Chairman and CEO
Bob Rossiter Chairman and CEO
Slide 3: Outline of Presentation
Outline of Presentation Bob Rossiter, Chairman and CEO Business and Financial Update Overview of Product Strategy Dave Wajsgras, Executive Vice President and CFO Interior Products Strategy Jim Vandenberghe, Vice Chairman Industry Trends Seating Systems Strategy Electrical / Electronics Systems Strat
Slide 4: Business and Financial Update
Business and Financial Update Implementing global restructuring plan -- overall restructuring framework unchanged Working with customers and suppliers to achieve a balanced pricing model Evaluating strategic options for interiors business, including potential joint venture partnerships Despite near-
Slide 5: Restructuring Implementation
$250M* total - global in nature Targeting 5% - 7% reduction in worldwide headcount Actions to impact more than 20 manufacturing facilities Payback expected in 2-3 years Restructuring Implementation** * Actual restructuring costs will be dependent on various factors, including the timing of certain a
Slide 6: Working to Address Supply Chain Issues
Working to Address Supply Chain Issues Continued distress within tier II and tier III supply base Raw materials remain at high levels with signs of potential increases. . . Hurricane Katrina impact? Leveraging best-in-class purchasing practices Affordable cost structure Cost Technology Optimization
Slide 7: Profile of Product Groups
Profile of Product Groups Seating Electrical / Electronics Interior Products
Slide 8: Lear to Remain Focused on Growing Seating and Electrical/Electronics Systems
Lear to Remain Focused on Growing Seating and Electrical/Electronics Systems Ample opportunity to create shareholder value within automotive industry Non-traditional Big Three* customer mix now about 50% of total and growing steadily New product opportunities in Seating and Electrical / Electronics
Slide 9: Status of Interior Product Group
Status of Interior Product Group Establishing a "stand-alone" unit within Lear Corporation, reporting to the CFO Will interface with customers, suppliers and labor directly and independently Evaluating all strategic options while implementing restructuring actions to improve capacity utilization and
Slide 10: Near-Term Business Assessment
Near-Term Business Assessment* Industry conditions remain challenging Implementation of global restructuring continues Streamlined organization now in place Actively addressing supply chain challenges Opportunities for profitable growth in Seating and Electrical / Electronics Systems Evaluating a ne
Slide 11: Dave Wajsgras, Executive Vice President and CFO
Dave Wajsgras Executive Vice President and CFO
Slide 12: Status of Interior Products Market
Status of Interior Products Market Business characteristics Industry overcapacity High raw material costs Insufficient pricing Unacceptable financial performance Financial returns have continued to decline Several key players are in bankruptcy or a loss position OEMs now retaining total integrator r
Slide 13: Interior Products
Flooring & Acoustics Door & Trim Systems Overhead Systems Instrument Panels / Cockpits Interior Products
Slide 14: Estimated Global Interior Products Market
Estimated Global Interior Products Market Door Panels Headliners Floor & Acoustic Instrument Panels Other Cockpits 0.24 0.07 0.19 0.24 0.26 0.65 Total Global Interior Products Market Is About $30 Billion; Cockpit Assembly Adds $45 Billion Flooring & Acoustics Instrument Panels Other Trim Overhead Sy
Slide 15: Interiors Business Description
Interiors Business Description Lear's Interior Systems Division is headquartered in Dearborn, MI Built significantly from acquisitions Facilities: 44 manufacturing facilities in the US, Canada, Mexico, Eastern and Western Europe Employees: ~19,000 Hourly ~16,000; Salaried ~3,000 Global sales of abou
Slide 16: Interiors Business - 2004 Sales Breakdown
N.A. Europe East 0.7 0.3 Interiors Business - 2004 Sales Breakdown Ford GM DCX Other Asian OEM East 0.345 0.292 0.168 0.144 0.051 Customer Ford 35% Other 14% GM 29% Asian OEM 5% DCX 17% Door Flooring & Acoustics IP Over BM East 1472 700 551 537 78 Segment Door & Trim 44% IP / Cockpits 17% Overhead S
Slide 17: Interiors Business - Key Financials
Interiors Business - Key Financials Financial Returns Continue To Be Under Pressure * Please see slide titled "Use of Non-GAAP Financial Information" at the end of this presentation for further information.
Slide 18: Interior Products Sales Backlog
2004 2005 2006 2007 2008 East 750 1550 1350 900 500 West 30.6 38.6 34.6 31.6 North 45.9 46.9 45 43.9 2004 2005 2006 2007 East 750 425 600 225 West 30.6 38.6 31.6 North 45.9 46.9 43.9 Interior Products Sales Backlog* Backlog Subject To Change Reflecting Outcome Of Strategy For Interior Products Big T
Slide 19: Near-Term Plan
Near-Term Plan* Expand and accelerate operational restructuring Improve or re-source low return programs / components Eliminate excess and inefficient manufacturing capacity Explore and pursue various strategic options Global, regional and product line alternatives Financial partners - co-invest in
Slide 20: Characteristics of Lear's Product Groups
Characteristics of Lear's Product Groups Seating & Electrical Distribution Systems integration / program management Assembly / labor-intensive manufacturing Engineered component sourcing / procurement Just-in-time or sequential delivery Interior Products Component orientation Capital intensive High
Slide 21: Jim Vandenberghe, Vice Chairman
Jim Vandenberghe Vice Chairman
Slide 22: Industry Trends
Industry Trends Consumers demanding more interior features Automakers focused on world-class interiors and "Perceptual Quality" Emphasis on the interior in automotive advertising Seating and electronic features are a priority to customers and central to the vehicle interior
Slide 23: Top 10 Vehicle Features for Commuters
Comfortable seats Automatic transmission Good visibility In-dash CD changer or satellite radio Steering wheel-mounted stereo controls Controlled noise, vibration and handling Good fuel economy Well-designed cup holders and ample storage Two power points and a hands-free voice-activated phone system
Slide 24: Top 10 Features for Mid-Size SUV Customers
Power 8-way driver's seat Side impact airbags (all rows) RKE with remote start Leather seats In-dash 6-disc CD player Control cluster (flip pack) Fold-flat 2nd row seats Traction control Sunroof/moonroof Overhead console with map lights, sunglass and garage door opener storage, storage bin and drive
Slide 25: Price-Resistant Features
The following features were selected at roughly the same rates in the ideal and price-constrained scenarios: Premium sound system Tire pressure monitor Integrated cell phone Cargo organizer Navigation system (audible directions only) Driver and front passenger seat memory Front passenger fold-flat s
Slide 26: Priority Emphasis on the Interior
Priority Emphasis on the Interior "(In the) Interior is where you spend all of your time. It makes total sense to me to want to get it right." J Mays, Ford "Interiors are an area of huge focus for General Motors." Bob Lutz, GM "For us, the interior has always been a priority of design." Helmut Panke
Slide 27: Interior Advertising Focuses on Lear Products
Interior Advertising Focuses on Lear Products BMW 3 - Series Electronics VW Multivan Reconfigurable Seating Volvo XC90 Flexible Seating
Slide 28: Seating Systems Market Overview
Seating Systems Market Overview Lear JCI Magna Other Cockpits 0.42 0.41 0.08 0.09 0.65 Lear JCI Faurecia Other 0.27 0.29 0.21 0.21 Lear - 27% Others - 9% Lear - 42% Magna - 8% JCI - 41% JCI - 29% North America Market Europe Market Faurecia - 23% Others - 21% $15 billion $14 billion Total Global Seat
Slide 29: Seating Systems Strategy
Seating Systems Strategy* Strong growth in Asia New backlog growth in 2005 Targeted programs with GM, VW/Audi, Proton and Tata Selective vertical integration (foam, mechanisms and trim) Global growth opportunities with new products that provide flexible seating configurations Leverage reputation as
Slide 30: Seating Systems Strategy - New Technology
Seating Systems Strategy - New Technology World leader in high performance seating systems in premium vehicles Porsche, GM, Ford, Mercedes, BMW, Ferrari, Jaguar Supports fuel economy initiatives Leverage common architecture strategy Protec Plus provides passenger support during collisions Introduce
Slide 31: Lear Flexible Seat Architecture
Lear Flexible Seat Architecture Modular system that can be packaged in several vehicle environments through the utilization of power and common components Currently on over a dozen programs, totaling nearly 3.5 million vehicles Benefits Reduced development timing, costs and capital Enhanced comfort
Slide 32: ProTec Plus
Second generation self-aligning head restraint Significantly reduced forces and movements in the neck Improved comfort by exceeding regulatory requirements Potential for improved rear and lateral vision ProTec Plus Provides early and sustained support to the occupant's head in a rear impact collisio
Slide 33: Thin Profile Flexible Bolster Seating
Provides rear-seat occupant with back and cushion bolster support Thin-folding seat delivers excellent interior storage space when folded As stylish and comfortable as the driver's seat Single-handed operation Thin Profile Flexible Bolster Seating
Slide 34: Stadium Slide Seat System
Provides one-handed easy entry feature for ingress/egress to 3rd row seat Seat back reclines and folds flat Locks into stadium position Single-handed operation Stadium Slide Seat System
Slide 35: Electrical Distribution Market Overview
Electrical Distribution Market Overview Lear delphi Yazaki Other Cockpits 0.13 0.37 0.31 0.19 0.65 Lear Delphi Valeo Other 0.15 0.35 0.35 0.15 Lear - 15% Others - 19% Lear - 13% Yazaki - 31% Delphi - 37% Delphi - 35% North America Market Europe Market Valeo - 15% Others - 35% $7 billion $5 billion T
Slide 36: Key Global Electronics Segments
Key Global Electronics Segments Audio Instrument Clusters Switches Body Electronics Safety Infotainment Other 0.37 0.17 0.16 0.14 0.13 0.09 0.03 Total North American And European Market Is About $17 Billion And Growing Instrument Clusters Audio / Infotainment Switches Body Electronics Safety Other S
Slide 37: Putting it all together . . .
TV Receivers Sound Systems Lighting Power System Body Controller 23 way Pinheader Seating System Terminals & Connectors for Wire Harness Pre Safe Box with Power Fuse Advanced Front Lighting System Jumper Start Putting it all together . . .
Slide 38: Electrical/Electronics Systems Strategy
Electrical/Electronics Systems Strategy New programs with Toyota, Hyundai, Nissan and Honda Electronics capability added in Asia Capitalize on growing consumer demand for increased electronic features and content Continue organic growth in smart junction boxes, RF technology, audio/infotainment Vert
Slide 39: Electrical/Electronics Systems Strategy - New Technology
Electrical/Electronics Systems Strategy - New Technology New convenience and safety features drive added content to electrical system architecture Increased circuit count Smart Junction Box electronics New wireless products IntelliTireTM pressure monitoring system Universal Garage Door Opener Two-wa
Slide 40: Tire Pressure Monitoring System (IntelliTire)
Tire Pressure Monitoring System (IntelliTireTM) Alerts the driver to changes in tire pressure or temperature High volume product Basic TPMS functionality is U.S. government-mandated Base system meets regulations / premium system has more advanced features
Slide 41: Universal Garage Door Opener
Universal Garage Door Opener Wireless control system that contains an integrated transmitter that can be programmed to activate radio frequency devices, such as garage doors, entry door locks and home/office lighting Consumers indicate high level of interest in car-to-home technology Works with both
Slide 42: Car2U Two-Way Remote Keyless Entry System
Car2UTM Two-Way Remote Keyless Entry System Wireless control system with an integrated transmitter/receiver that can control and display the status of the vehicle, such as engine, lock/unlock, trunk, A/C, cabin temperature and more Ability to download vehicle status (security, climate) instantly Rel
Slide 43: Electrical/Electronics Systems Strategic Paths For Growth
Electrical/Electronics Systems Strategic Paths For Growth Product - Technology Transfer, Innovation Present Sales Lear Target New Customers New Products New Customers Same Products Vertical Integration
Slide 44: Summary
Summary* Retain Core Values Re-Focus Our Plan Emphasis on Execution Quality first Continued customer service LBO mentality/lean and accountable Focus on seating and electrical / electronics Improve or exit non-competitive businesses Selective vertical integration in tier II and tier III (with produc
Slide 45: Q & A Session
Q & A Session
Slide 46: Use of Non-GAAP Financial Information
In addition to the results reported in accordance with accounting principles generally accepted in the United States ("GAAP") included throughout this presentation, the Company has provided information regarding "income (loss) before interest, other expense and income taxes" (core operating earnings
Slide 47: Forward-Looking Statements
This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding anticipated financial results. Actual results may differ materially from anticipated results as a result of certain risks and uncertainties